Economic Theory

Money, when not acting as a store of value, is used to purchase either goods or services.

All goods and services take energy to procure. (It takes energy in the form of electricity or heat and the resulting force enacted upon matter in an organized process to produce goods, and energy in the form of food and electricity to feed workers and keep services and institutions functioning).

Because both goods and services require energy to produce and demand is provided and directed by money, money by extension becomes intelligently manipulable energy so long as it is accepted by those that carry out the work or control the sources of energy. Money when stored thus acts as potential energy, and when spent acts as kinetic energy – but in reality is neither due to its fiat nature.

With the understanding that money ~= energy we can derive that an economy is merely organized changes in energy/matter dictated by monetary demand of individuals and collectives wielding that money. Based on this theory it would also make sense that money should be derived from energy sources instead of energy being derived from money with no actual reciprocation. To demonstrate this flaw in fiat money think about the world economy and how it runs using food and petroleum. If the fiat money was removed from the global socio-economic system but everyone continued to work their jobs to the same degree all the machinery driving the economy would still be powered by petroleum – the economy would carry on and energy exchange would still occur. Now imagine the same world economy with fiat money and remove the energy sources (food and petroleum) from it. Would the economy still function? No. This means energy and its sources are the true value in this dynamic; money in its current form is merely the illusion of potential energy.

We should not ask how much money it takes to drive a car from point ‘a’ to ‘b’ but how much energy (gas – or electricity for electric cars) it would take to do so. The cost of the travel is based on energy which is priced in fiat dollars, not valued in it. It is the energy that is valued in travel, not the money – money is the means to energy while energy is the end itself. With this dynamic in mind it would make sense that transactions should be done in a currency that is a direct derivative of energy.

Fairness as a global reserve currency:

Solracoin could act as a fair potential global reserve currency because the sun shines on every country and territory in the world and all countries and territories demand energy. While solar insolation (intensity) may vary place to place all countries and state/territories within have a relatively equal potential generate solar energy relative to their respective demands (the exception being small islands with minimal surface areas). If integrated globally countries, territories, and nation states could trade energy produced and stored between each other by using net metering to help balance global demand on the micro and macro level. On a global scale with net metering and adequate and efficient energy transportation generation at night isn’t a large issue as the sun is always shining on half of the planet. With basic to moderate storage potential the concept becomes even more practical and resilient.

Demand for an energy based currency:

Continued demand for an energy based currency is fairly straight forward. Unless we find a way to manipulate reality outside of using energy, or a mechanism to generate infinite free energy, energy will continue to remain in demand. The current most sustainable, abundant, and equi-available source of energy we currently have is sunlight and photovoltaic solar panels take advantage of that energy source.

The Current Unsustainable Monetary Dynamic – The Ouroborus:

Solracoin offers a potential solution to the current parasitic nature of the global economic-financial system. Because most money is issued at interest the outstanding debt is always higher than the available money to pay it back – this means at least some portion of the economy fundamentally must always be in debt. As interest compounds and accrues the ratio of people in debt to money available continues to grow – a metaphorical and philosophical Ouroborus (a snake eating its own tail). This type of financial system as a whole is unsustainable in the long term because the increasing debt void must be continually fed by the issuance of newly printed money to prevent a collapse (the death of the snake eating its own tail). This is the dynamic that causes inflation over time – because the ‘snake’ must continually be fed newly issued money to lengthen its body or come full circle to devour its own head. This dynamic is also amplified through fractional reserve banking and the compounding of interest itself over time. Essentially the inherent dynamics of the way most money is issued makes our global economic system unsustainable when carried out long enough as exponential growth will eventually cause one of two things: hyperinflation or large portions of ‘participants’ to default on their payments.

A generative as opposed to parasitic currency:

Some of the best designs humans have conceived of have come from patterns and systems observed in nature. Much like plants function as the foundation of the global ecosystem by converting light and matter into an abundant usable energy source for other life – Solar energy has the potential to do the same in terms of turning sunlight into the foundation for abundant non-caloric energy and thus has the potential to act as the foundation for global economics.

What does it take to create a generative economic system based on energy?

Using the theory that energy is money – in order to create a generative system using solar panels the panels must produce more energy over their lifespan than they take to create. The basic formula for this dynamic is simple: Energy Returned must be greater than Energy Invested or ER>EI.

Fortunately modern solar panels do indeed create a net positive return on energy invested over their life spans and as their efficiency increases the amount of energy returned will become greater. As of today the ERoEI of photovoltaic solar panels is ~6 to 9 at the lower end with some estimates being much higher (Meaning for every 1 unit of energy invested to manufacture the solar panels they return 6 to 9 units of energy over their lifespan of generation).

This means that a generative monetary system based on electricity generated by solar panels could create exponentially increasing abundance (in terms of money/energy) if incorporated into positive feedback loop (ie: Solar breeders – Solar powered solar manufacturing plants that function at a net positive ERoEI factories).

Profit Cycling and Creating a Positive Feedback Loop:

As seen in the technical diagram above a portion of the profit in fiat $USD from the kWh sold are cycling back to back the Solracoins themselves. This may or may not be a permanent dynamic but it will help establish credibility and a baseline value as the Solracoin network itself grows (although the Solracoin value may float above the fiat backing). The idea is to allow a smooth transition from a Fiat based currency to and Energy based currency; the fiat money backing Solracoin acts as the transitory area between the two.

To reiterate overall goal of SolraCoin is to act as a means to provide a smooth transition from a fiat based monetary system with built in characteristics of parasitism and scarcity to that of an energy based economic system with fundamentally generative characteristics, abundance, and real value.

If a solar breeder is successfully created with a solar based currency tied to it where reinvestment within the system is split between both stakeholders merely based on participation in the system (socialistic principles) and based on proportional equity in the system (capitalistic principles) then greed fundamentally becomes a positive trait within this system as selfish interest benefits the self while also helping the other. Greed in this system is no longer a parasitic trait but a generative one which has a mutually benefiting dynamic between the rich and poor.